Gold Tests Key Support Level After Trade Talk News

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Last week was another volatile week for Gold with over $150 in the high/low range. Gold appears to be building an excellent base above $3,300 per ounce. Gold closed Friday at $3,330 per ounce, remaining on a bullish track, up $701 (26.6%) for 2025 and up $100 for last week.

Early reports coming from both U.S. and Chinese spokesmen on trade talks in Switzerland have been positive, and it appears that we may have a trade deal and a reduction of tariffs in the near future. As trade news starts to roll in, Gold is moving lower as the U.S. Dollar is moving higher. The initial reaction to this news was a $68 drop in the price of Gold to $3,257, below the key $3,300 per ounce support level. As Gold trading moved into Asia, the Middle East, London, and the U.S., the Gold price traded between $3,206 and $3,286 per ounce.

Concerns about the three warring hot spots, Israel, Pakistan, and Ukraine appear to be cooling down with possible peace talks. That news should slow down safe-haven buying in those areas. However, Central bank buying continues to remain strong and will continue to reach record levels as we move into the summer months.

Key Economic data to watch this week:
The week of May 12th to 16th, 2025
- Tuesday: Consumer Price Index
- Thursday: Initial Jobless Claim, U.S. Retail Sales
- Friday: Housing Starts/Building permits

Today: This morning, the U.S. Dollar rallied 2.5% to 101.94 on the U.S./China trade news, while Gold tested the key $3,200 support level. Most of the details on the trade/tariff agreement between the U.S. and China have not been worked out, but traders have optimism and the market is reacting to it. Right now, Gold has rallied $35 off the support level.

Last week, Silver traded between $32 and $33.50 all week, ending the week at $32.68, up $0.66 per ounce for the week. Silver is clearly consolidating its recent gains and building a firm base for the next leg higher. Last week, we saw some resistance at the $33.50 level.

After last weekend’s trade news was reported, the Silver price quickly dropped $0.25 per ounce, reaching a low of $32.45 before seeing bargain buying. Right now, the Silver-to-Gold ratio is 101.64-to-1.

Today: Silver tested the key $32 per ounce support level, reaching a low of $31.86 before quickly bouncing back. Silver has moved back above the $32.50 level has we see bargain buyers come back.

The Bank for International Settlements (BIS), representing central bank governors from 27 countries, continually provides advice for the world’s banks and major financial institutions. The BIS started in 1988 with Basel I, which made significant changes and provided guidelines for the world financial and banking world. Basel II came later, providing more clarity and more guidelines. On July 1st, 2025 the final and most important part of these changes will go into effect for Gold ownership.

Under Basel III, physical Gold is reclassified as a Tier 1 asset, meaning it's treated as a safe and liquid asset like cash or government bonds. This change affects how banks account for Gold on their balance sheets and how they manage their reserves. Since 1933, American banks, unlike many foreign banks, have not accepted Gold for collateral or loans or treated Gold as an asset. I believe that we will start seeing changes after July 1st, 2025. This can only help to increase Gold ownership.

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